Trade by manual strategies involves the construction of indicators of shapes or signals of technical analysis at the entrance to the market. Indicators — dial, color, sound — draw the entry point to show that here it is the same candle on which to enter the market, but… As soon as trader opens a position, the indicator immediately jumps to a neighboring candle, showing that the position is open unsuccessfully. After several “hopping” there is a feeling that the strategy is non-working, or broker manipulates prices, as a result, the loss of confidence in stock trading.
Technical analysis indicators
A classic mistake of novice traders – not understanding of how the market works. The first rule of trading: price is everything! Everything in the market depends on the price and the technical indicators are following the price. That is, their schedule depends on how the price will behave next. The task of the trader is to predict the direction of prices and the forecast accuracy is determined by experience, intuition and ability to use technical and fundamental analysis. Technically, the graph looks like this:
price went up, the indicator after analysis and comparison of historical data draws a line;
price changed and went down. The indicator, again comparing data for previous periods, drew a new line.
In the basis of technical indicators lie formulas that display in graphs patterns based on a certain period in the past (historical data). So if there is a sudden change in the direction of the price, the graph is simply redrawn. Alas, there are no strategies where the entry point is unchanged. Although the changes are minor, this may increase the loss or reduce the profit. There is the possibility to minimize the redraw of the graphs in the following ways:
to monitor economic calendar;
avoid trading in volatile market (for example, at the time of the news release). The more unpredictable the price behaves, the sharper will the graph be redrawn, and the harder it is to predict the right moment of entry into the market;
try to avoid trading during flat. Uncertain trend — market volatility;
to hone your strategy on a demo account to understand how accurately the graph and the entry point are drawn.
Since all technical indicators are redrawn, the optimal strategy should be based on a few simple or combined (aggregated) tools. Some indicators redraw the graph in the beginning of the candle, the other — in the end. The combination of indicators allows obtaining the average value. So when honing the strategy (note that in actual trading result may differ from a test of the work on this platform, slippage, etc.), you should understand the nature of the indicators.